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Sundaram Textiles' managing director keeps all pricing, hiring and purchase decisions with himself. Branch managers must seek his approval even for minor expenses, causing delays. He now allows branch managers to decide these matters within set limits as a permanent policy. Which statement best describes the change?

This is decentralisation. The managing director has adopted a permanent policy that systematically passes decision-making power on pricing, hiring and purchases to branch managers within limits. It is wider than delegating a single task and reduces delays caused by seeking approval for minor matters.

  1. ACentralisation has increased, because the MD retains final control through limits
  2. BDecentralisation has been introduced, since decision-making power is systematically pushed down to branch levelCorrect
  3. CIt is merely delegation of one task, with no effect on the structure of authority
  4. DIt is a case of departmentation by territory only

Explanation

A permanent policy giving branch managers decision power across routine matters is systematic dispersal of authority, which is decentralisation. Option C is wrong because the change is organisation-wide and policy-based, not a one-off task assignment. Limits do not make it centralisation.

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